July 3, 2012

GOP Govs to Uninsured: Drop Dead

That didn’t take long. Republican lawmakers from across the country are saying no to the Affordable Care Act’s expansion of Medicaid—even though it means turning down a sweetheart deal from the federal government that would create jobs in their states and, more important, provide millions of low-income Americans with health insurance.

Nikki Haley of South Carolina, Bobby Jindal of Louisiana, and, of course, Rick Scott of Florida were the first Republican governors to say they would take advantage of last week’s Supreme Court ruling in NFIB v. Sebelius, in which the justices found most of the Affordable Care Act to be constitutional but declared that the Medicaid expansion went too far.

As enacted, the law called upon states to change their Medicaid programs, so that they were open to any resident with income below 133 percent of the poverty line. (Presently, federal law dictates that Medicaid be open only to certain classes of low-income people, such as children.) States that refused to make Medicaid so widely available could lose all of their Medicaid funding. Because the federal government provides more than half of the program’s funding, states would be highly unlikely to risk that. You may recall that Governor Rick Perry of Texas talked about withdrawing from Medicaid last year. He dropped the idea once local officials, and representatives of Texas health care providers, reminded him how devastating such a move would be to his state.

In NFIB v. Sebelius, the justices said that forcing states to choose between an expanded Medicaid program or no Medicaid program at all was “coercive.” If states decline to expand their Medicaid program, the justices said, they are entitled to hold onto the money for people who are already eligible for the program. That’s precisely what Haley, Jindal, and Scott would like to do: Keep Medicaid as it is now, with only certain groups eligible, rather than make it available to all low-income residents. In the coming days and weeks, more governors will doubtless be saying the same thing.

Scott insisted he was only looking out for his state’s fiscal health. “It’s going to cost $1.9 billion a year,” Scott said on CNBC. He’s wrong. For the first three years of the expansion, the federal government is offering to pick up the entire cost of insuring the new enrollees. The only cost to the state would be small investments in administration and infrastructure. From 2017 to 2020, the federal contribution would decline until it hit 90 percent, where it would stay. But, even then, the annual cost of supporting the additional Medicaid enrollees in Florida would be less than $1.9 billion, once you disregard other costs that have little or nothing to do with adding people to the program.

As Politifact noted in a thorough and, as far as I can tell, accurate assessment based on Florida's own official budget estimates, "really, the expansion to Medicaid—the part Scott is fighting—would cost the state about a little more than $500 million once it’s fully implemented in 2020, according to the state."

Is $500 million meaningless? No. But it’s not much money in the context of the Florida’s annual budget, which was $70 billion last year. That’s particularly true when you consider that the state will inevitably save money elsewhere, since without Medicaid many of those uninsured people will end up seeking free care in emergency rooms, with providers passing along the costs to others (including government). Don’t forget that the federal Medicaid dollars go directly into the pockets of doctors, hospitals, and local health care providers, creating jobs and new economic activity. Of course, the real impact would be on Florida’s poorest residents: According to an analysis by the Kaiser Family Foundation, the Medicaid expansion would bring health insurance to more than a million Floridians that would otherwise not have coverage.

All of these things are true nationally. If fully implemented, 15 million low-income Americans would get insurance because of the Medicaid expansion. But state spending on Medicaid would grow less than 3 percent overall, according to the Congressional Budget Office. As the Center on Budget and Policy Priorities points out, the real cost to states would be even lower than that:

To assess the fiscal impact on states of the Medicaid expansion, one must look at more than just Medicaid, because the health reform law’s coverage expansions willreduce some state and local costs. As a result of health reform, Medicaid will essentially pay for many health services now provided to people who are uninsured. Thus, the federal government will bear a substantial share of the cost of providing health care services to people whose health care costs otherwise would be borne in part by state or local governments.

Precisely because medical providers and local officials stand to gain so much from the Medicaid expansion, they will likely apply pressure on their governors, just as providers and local officials did to Perry in Texas. And many conservative governors are savvy enough to realize this is all just a prelude to negotiations with the federal government, in which they can threaten to turn down new Medicaid money if the federal government doesn’t allow them to enact more conservative reforms. (In Politico last week, J. Lester Feder and Jason Millman had a well-informed explanation of how that might play out.)

But with Scott and perhaps a few others, you’d be foolish not to take them at their word. They really think this is a bad idea to be opposed at all costs—which says something about their fanatical devotion to anti-government philosophy, their cold indifference to their most vulnerable constituents, or some combination of the two.

As David Dayen rightly observes, it may take electoral defeat, or at least the credible threat of it, to make them relent.

Update: Actually, it's up to five governors. Iowa's Terry Branstad and Wisconsin's Scott Walker say they, too, won't participate in the expansion. Greg Sargent is keeping a running tally of the number of people who could lose out on insurance because of these governors. He figures it's up to 1.4 million.